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Unemployment and Vacancies with Sectoral Shifts

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  • Hosios, Arthur J

Abstract

Recent analyses of unemployment-vacancy series suggest that aggregate shocks, rather than sectoral shocks, are the primary factors responsible for unemployment fluctuations. This inference follows from two widely held beliefs: sectoral shocks induce only positive unemployment-vacancy comovements, while negative comovements are necessarily the result of aggregate demand shocks. This paper describes an equilibrium matching model that identifies plausible circumstances in which neither assumption is correct, thus suggesting that unemployment-vacancy data are inconclusive. Interestingly, this model's novel results are due to standard features in the contracting literature: firms experience relative price shocks and negotiate contracts that prescribe temporary layoffs. Copyright 1994 by American Economic Association.

Suggested Citation

  • Hosios, Arthur J, 1994. "Unemployment and Vacancies with Sectoral Shifts," American Economic Review, American Economic Association, vol. 84(1), pages 124-144, March.
    • Handle: RePEc:aea:aecrev:v:84:y:1994:i:1:p:124-44
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    Cited by:

    1. Shigeru Fujita, 2011. "Dynamics of worker flows and vacancies: evidence from the sign restriction approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(1), pages 89-121, January/F.
    2. Hairault, Jean-Olivier & Zhutova, Anastasia, 2018. "The cyclicality of labor-market flows: A multiple-shock approach," European Economic Review, Elsevier, vol. 103(C), pages 150-172.
    3. Francesco Furlanetto & Nicolas Groshenny, 2016. "Mismatch Shocks and Unemployment During the Great Recession," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(7), pages 1197-1214, November.
    4. Francesco Furlanetto & Nicolas Groshenny, 2012. "Matching efficiency and business cycle fluctuations," Working Paper 2012/07, Norges Bank.
    5. Simona E. Cociuba & James C. MacGee, 2018. "Demographics and Sectoral Reallocations: A Search Theory with Immobile Workers," University of Western Ontario, Departmental Research Report Series 20182, University of Western Ontario, Department of Economics.
    6. Lu, Jing, 1996. "A reconsideration of the interindustry employment dispersion," Economics Letters, Elsevier, vol. 53(2), pages 203-208, November.
    7. John Haltiwanger & Steven J. Davis, 1999. "On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation," American Economic Review, American Economic Association, vol. 89(5), pages 1234-1258, December.
    8. Alon Kalay & Suresh Nallareddy & Gil Sadka, 2018. "Uncertainty and Sectoral Shifts: The Interaction Between Firm-Level and Aggregate-Level Shocks, and Macroeconomic Activity," Management Science, INFORMS, vol. 64(1), pages 198-214, January.
    9. Furlanetto, Francesco & Groshenny, Nicolas, 2016. "Reallocation shocks, persistence and nominal rigidities," Economics Letters, Elsevier, vol. 141(C), pages 151-155.
    10. Alejandro Justiniano & Claudio Michelacci, 2011. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe," NBER Working Papers 17429, National Bureau of Economic Research, Inc.
    11. Alejandro Justiniano & Claudio Michelacci, 2012. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the United States and Europe," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 8(1), pages 169-235.
    12. Joel Sobel, 2006. "For Better or Forever: Formal versus Informal Enforcement," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 271-298, April.
    13. Giovanni Gallipoli & Gianluigi Pelloni, 2013. "Macroeconomic Effects of Job Reallocations: A Survey," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 5(2), pages 127-176, December.
    14. Jon Strand, 1996. "Employment and wages with sector-specific shocks and worker moral hazard," Journal of Economics, Springer, vol. 63(2), pages 151-173, June.
    15. Phelan, Christopher & Trejos, Alberto, 2000. "The aggregate effects of sectoral reallocations," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 249-268, April.
    16. Jorgensen, Bjorn & Li, Jing & Sadka, Gil, 2012. "Earnings dispersion and aggregate stock returns," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 1-20.
    17. Storer, Paul, 1996. "Separating the effects of aggregate and sectoral shocks with estimates from a Markov-switching search model," Journal of Economic Dynamics and Control, Elsevier, vol. 20(1-3), pages 93-121.
    18. Bart Hobijn, 2012. "The industry-occupation mix of U.S. job openings and hires," Working Paper Series 2012-09, Federal Reserve Bank of San Francisco.
    19. repec:rim:rimwps:27-08 is not listed on IDEAS
    20. Peter Rodenburg, 2011. "The remarkable transformation of the UV curve in economic theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 18(1), pages 125-153.
    21. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS
    22. Giovanni Gallipoli & Gianluigi Pelloni, 2008. "Aggregate Shocks vs Reallocation Shocks: an Appraisal of the Applied Literature," Working Paper series 27_08, Rimini Centre for Economic Analysis.
    23. Paul R. Blackley, 1997. "The Short‐Run Relationship Between Sectoral Shifts and U.S. Labor Market Fluctuations," Southern Economic Journal, John Wiley & Sons, vol. 64(2), pages 486-502, October.

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